BILL NUMBER: AB 460	CHAPTERED  06/09/00

	CHAPTER   34
	FILED WITH SECRETARY OF STATE   JUNE 9, 2000
	APPROVED BY GOVERNOR   JUNE 9, 2000
	PASSED THE ASSEMBLY   MAY 30, 2000
	PASSED THE SENATE   MAY 25, 2000
	AMENDED IN SENATE   MAY 18, 2000
	AMENDED IN SENATE   APRIL 25, 2000
	AMENDED IN SENATE   APRIL 6, 2000
	AMENDED IN SENATE   MARCH 30, 2000
	AMENDED IN ASSEMBLY   JANUARY 20, 2000
	AMENDED IN ASSEMBLY   JANUARY 6, 2000
	AMENDED IN ASSEMBLY   JANUARY 3, 2000
	AMENDED IN ASSEMBLY   APRIL 14, 1999

INTRODUCED BY   Assembly Member Ackerman

                        FEBRUARY 16, 1999

   An act to add Section 53216.8 to the Government Code, and to amend
Sections 16060.5, 16061.5, 16061.7, and 16061.8 of, and to add
Section 16061.9 to, the Probate Code, relating to trusts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 460, Ackerman.  Trusts:  trustees and other fiduciaries.
   (1) Existing law authorizes the legislative body of a local agency
to establish a pension trust, as specified.
   This bill would, in cases where the pension trust permits a
participant or beneficiary to direct investments in his or her
account, provide that a corporate custodian or a corporate trustee
that otherwise provides services to the trust shall not be liable for
any loss, or for any breach, which results from the participant's or
beneficiary's directions with respect to the assets in his or her
account.
   (2) Existing law defines the phrase "terms of the trust" for
purposes of laws regarding the duty of a trustee to keep the
beneficiaries of a trust reasonably informed of the trust and its
administration to include the written trust instrument of an
irrevocable trust or those provisions of a written trust instrument
that describe or affect an irrevocable portion of a trust.
   This bill would revise the definition to state that it means the
written trust instrument of an irrevocable trust instrument in effect
at the settlor's death that describes or affects that portion of a
trust that has become irrevocable at the settlor's death.  It also
would provide that the phrase includes documents irrevocably
exercising a power of appointment, as specified, but does not include
superseded trust instruments or amendments.
   (3) Existing law requires, when a revocable trust or any portion
thereof becomes irrevocable for any reason, that the trustee shall
provide a copy of the trust or irrevocable portion of it, as
specified.
   This bill would require the trustee to provide the copy, as
specified, when the trust becomes irrevocable or a portion of the
trust becomes irrevocable because of the death of one or more of the
settlors.  This bill would also require that the trustee provide the
copy, as specified, when the terms of the trust expressly provide
that the trust becomes irrevocable within one year of the death of a
settlor because of a contingency related to the death of one or more
settlors of the trust.
   (4) Existing law requires a trustee to provide specified
information regarding the trust and the trustee to each beneficiary
of an irrevocable trust or irrevocable portion of a trust, to each
heir of the settlor, and to the Attorney General, as specified.
   Existing law also provides that a trustee who fails to make a good
faith effort to serve the notification by the trustee shall be
responsible for all damages including attorneys' fees and costs
resulting from the failure.
   This bill would revise and recast these provisions to, among other
things, require that trustees provide specified information to
certain beneficiaries and heirs when the terms of the trust expressly
provide that the trust becomes irrevocable within one year of the
death of a settlor because of a contingency related to the death of
one or more settlors of the trust.  The bill would further provide
that a trustee who fails to give notification, as specified, to a
beneficiary shall be responsible for all damages, attorney's fees,
and costs caused by the failure unless the trustee has made a
reasonably diligent effort to comply with the notification
requirements.  This bill would also provide that a trustee who fails
to give notification, as specified, to an heir who is not a
beneficiary and who is known to the trustee shall be responsible for
all damages caused to the heir by the failure unless the trustee has
made a  reasonably diligent effort, as defined, to comply with
notification requirements.  The bill would further provide that a
trustee may consider the fact that the period within which a
beneficiary may contest a trust has not expired when exercising
discretion in distributing assets.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 53216.8 is added to the Government Code, to
read:
   53216.8.  In the case of a pension trust established pursuant to
this article which provides for individual accounts and permits a
participant or beneficiary to direct investments in his or her
account, if a participant or beneficiary directs investments in his
or her account, no person who is a corporate custodian or a corporate
trustee that provides services to the pension trust shall be liable
for any loss, or by reason of any breach, which results from that
participant's or beneficiary's directions with respect to the assets
in his or her account.
  SEC. 2.  Section 16060.5 of the Probate Code is amended to read:
   16060.5.  As used in this article, "terms of the trust" means the
written trust instrument of an irrevocable trust or those provisions
of a written trust instrument in effect at the settlor's death that
describe or affect that portion of a trust that has become
irrevocable at the death of the settlor.  In addition, "terms of the
trust" includes, but is not limited to, signatures, amendments,
disclaimers, and any directions or instructions to the trustee that
affect the disposition of the trust.  "Terms of the trust" does not
include documents which were intended to affect disposition only
while the trust was revocable.  If a trust has been completely
restated, "terms of the trust" does not include trust instruments or
amendments which are superseded by the last restatement before the
settlor's death, but it does include amendments executed after the
restatement.  "Terms of the trust" also includes any document
irrevocably exercising a power of appointment over the trust or over
any portion of the trust which has become irrevocable.
  SEC. 3.  Section 16061.5 of the Probate Code is amended to read:
   16061.5.  (a) When a revocable trust or any portion of a revocable
trust becomes irrevocable because of the death of one or more of the
settlors of the trust, or because, by the express terms of the
trust, the trust becomes irrevocable within one year of the death of
a settlor because of a contingency related to the death of one or
more of the settlors of the trust, the trustee shall provide a true
and complete copy of the terms of the irrevocable trust, or
irrevocable portion of the trust, to any beneficiary of the trust who
requests it and to any heir of a deceased settlor who requests it.
   (b) The trustee shall, for purposes of this section, rely upon any
final judicial determination of heirship.  However, the trustee
shall have discretion to make a good faith determination by any
reasonable means of the heirs of a deceased settlor in the absence of
a final judicial determination of heirship known to the trustee.
  SEC. 4.  Section 16061.7 of the Probate Code is amended to read:
   16061.7.  (a) A trustee shall serve a notification by the trustee
as described in this section in the following events:
   (1) When a revocable trust or any portion thereof becomes
irrevocable because of the death of one or more of the settlors of
the trust, or because, by the express terms of the trust, the trust
becomes irrevocable within one year of the death of a settlor because
of a contingency related to the death of one or more of the settlors
of the trust.
   (2) Whenever there is a change of trustee of an irrevocable trust.
  The duty to serve the notification by the trustee is the duty of
the continuing or successor trustee, and any one cotrustee may serve
the notification.
   (b) The notification by the trustee required by subdivision (a)
shall be served on each of the following:
   (1) Each beneficiary of the irrevocable trust or irrevocable
portion of the trust, subject to the limitations of Section 15804.
   (2) Each heir of the deceased settlor, if the event that requires
notification is the death of a settlor or irrevocability within one
year of the death of the settlor of the trust by the express terms of
the trust because of a contingency related to the death of a
settlor.
   (3) If the trust is a charitable trust subject to the supervision
of the Attorney General, to the Attorney General.
   (c) A trustee shall, for purposes of this section, rely upon any
final judicial determination of heirship, known to the trustee, but
the trustee shall have discretion to make a good faith determination
by any reasonable means of the heirs of a deceased settlor in the
absence of a final judicial determination of heirship known to the
trustee.
   (d) The trustee need not provide a copy of the notification by
trustee to any beneficiary or heir (1) known to the trustee but who
cannot be located by the trustee after reasonable diligence or (2)
unknown to the trustee.
   (e) The notification by trustee shall be served by mail to the
last known address, pursuant to Section 1215, or by personal
delivery.
   (f) The notification by trustee shall be served not later than 60
days following the occurrence of the event requiring service of the
notification by trustee, or 60 days after the trustee became aware of
the existence of a person entitled to receive notification by
trustee, if that person was not known to the trustee on the
occurrence of the event requiring service of the notification.  If
there is a vacancy in the office of the trustee on the date of the
occurrence of the event requiring service of the notification by
trustee, or if that event causes a vacancy, then the 60-day period
for service of the notification by trustee commences on the date the
new trustee commences to serve as trustee.
   (g) The notification by trustee shall contain the following
information:
   (1) The identity of the settlor or settlors of the trust and the
date of execution of the trust instrument.
   (2) The name, mailing address and telephone number of each trustee
of the trust.
   (3) The address of the physical location where the principal place
of administration of the trust is located, pursuant to Section
17002.
   (4) Any additional information that may be expressly required by
the terms of the trust instrument.
   (5) A notification that the recipient is entitled, upon reasonable
request to the trustee, to receive from the trustee a true and
complete copy of the terms of the trust.
   (h) If the notification by the trustee is served because a
revocable trust or any portion of it has become irrevocable because
of the death of one or more settlors of the trust, or because, by the
express terms of the trust, the trust becomes irrevocable within one
year of the death of a settlor because of a contingency related to
the death of one or more of the settlors of the trust, the
notification by the trustee shall also include a warning, set out in
a separate paragraph in not less than 10-point boldface type, or a
reasonable equivalent thereof, that states as follows:
   "You may not bring an action to contest the trust more than 120
days from the date this notification by the trustee is served upon
you or 60 days from the date on which a copy of the terms of the
trust is mailed or personally delivered to you, whichever is later."
   (i) Any waiver by a settlor of the requirement of serving the
notification by trustee required by this section is against public
policy and shall be void.
   (j) A trustee may serve a notification by trustee in the form
required by this section on any person in addition to those on whom
the notification by trustee is required to be served.  A trustee is
not liable to any person for serving or for not serving the notice on
any person in addition to those on whom the notice is required to be
served.  A trustee is not required to serve a notification by
trustee if the event that otherwise requires service of the
notification by trustee occurs before January 1, 1998.
  SEC. 5.  Section 16061.8 of the Probate Code is amended to read:
   16061.8.  No person upon whom the notification by the trustee is
served pursuant to this chapter may bring an action to contest the
trust more than 120 days from the date the notification by the
trustee is served upon him or her, or 60 days from the day on which a
copy of the terms of the trust is mailed or personally delivered to
him or her, whichever is later.
  SEC. 6.  Section 16061.9 is added to the Probate Code, to read:
   16061.9.  (a) A trustee who fails to serve the notification by
trustee as required by Section 16061.7 on a beneficiary shall be
responsible for all damages, attorney's fees, and costs caused by the
failure unless the trustee makes a  reasonably diligent effort to
comply with that section.
   (b) A trustee who fails to serve the notification by trustee as
required by Section 16061.7 on an heir who is not a beneficiary and
whose identity is known to the trustee shall be responsible for all
damages caused to the heir by the failure unless the trustee shows
that the trustee made a reasonably diligent effort to comply with
that section.  For purposes of this subdivision,  "reasonably
diligent effort" means that the trustee has sent notice by
first-class mail to the heir at the heir's last mailing address
actually known to the trustee.
   (c) A trustee, in exercising discretion with respect to the timing
and nature of distributions of trust assets, may consider the fact
that the period in which a beneficiary or heir could bring an action
to contest the trust has not expired.
